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IMAGE  EVALUATION 
TEST  TARGET  (MT-3) 


1.0 


I.I 


m.  125 


us,    12.0 


IIS 

u 


Is 


IL25  III  1.4 


1.6 


vQ 


03 


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Photographic 

Sciences 
Corporation 


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23  WEST  MAIN  STREET 

WiBSTER.N.Y.  14580 

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CIHM/ICMH 

Microfiche 

Series. 


CIHM/ICMH 
Collection  de 
microfiches. 


Canadian  Institute  for  Historical  Microreproductions  /  institut  Canadian  de  microreproductions  historiques 


Technical  and  Bibliographic  Notes/Notes  techniques  et  bibliographiques 


The  institute  has  attempted  to  obtain  the  best 
original  copy  available  for  filming.  Features  of  this 
copy  which  may  be  bibliographically  unique, 
which  may  alter  any  of  the  images  <n  the 
reproduction,  or  which  may  significantly  change 
the  usual  method  of  filming,  are  checked  below. 


0    Coloured  covers/ 
Couverture  de  couleur 


I      I    Covers  damaged/ 


D 


D 


D 
D 


D 


D 


Couverture  endommag^e 


Covers  restored  and/or  laminated/ 
Couverture  restaurie  et/ou  peiiicul^e 


I      I    Cover  title  missing/ 


Le  titre  de  couverture  manque 


I      I    Coloured  maps/ 


Cartes  gdographiques  en  couleur 

Coloured  ink  (i.e.  other  than  blue  or  black)/ 
Encre  de  couleur  (i.e.  autre  que  bleue  ou  noire) 


I      I    Coloured  plates  and/or  illustrations/ 


Planches  et/ou  illustrations  en  couleur 

Bound  with  other  material/ 
Reli6  avec  d'autres  documents 

Tight  binding  may  cause  shadows  or  distortion 
along  interior  margin/ 

La  re  liure  serr6e  peut  causer  de  I'ombre  ou  de  la 
distortion  le  long  de  la  marge  intirieure 

Blank  leaves  added  during  restoration  may 
appear  within  the  text.  Whenever  possible,  these 
have  been  omitted  from  filming/ 
II  se  peut  que  certaines  pages  blanches  ajoutdes 
lors  d'une  restauration  apparaissent  dans  le  texte. 
mais.  lorsque  cela  6tait  possible,  ces  pages  n'ont 
pas  6t6  film6es. 

Additional  comments:/ 
Commentaires  suppldmentaires; 


L'Institut  a  microfilm^  le  meilleur  exemplaire 
qu'il  lui  a  6t6  possible  de  se  procurer.  Les  details 
de  cet  exemplaire  qui  sont  peut-Atre  uniques  du 
point  de  vue  bibliographique.  qui  peuvent  modifier 
une  image  reproduite,  ou  qui  peuvent  exiger  une 
modification  dans  la  m^thode  normale  de  filmage 
sont  indiqute  ci-dessous. 


I      I    Coloured  pages/ 


n 


D 


Pages  de  couleur 

Pages  damaged/ 
Pages  endommagies 


r~7|    Pages  restored  and/or  laminated/ 


Pages  restaurdes  et/ou  pellicul6es 

Pages  discoloured,  stained  or  foxet 
Pages  d^coiories,  tachetdes  ou  piqu^es 

Pages  detached/ 
Pages  d6tachdes 

Showthrough/ 
Transparence 

Quality  of  prir 

Qualit6  indgaie  de  I'impression 

Includes  supplementary  materii 
Comprend  du  mat6riel  suppldmentaire 

Only  edition  available/ 
Seule  Edition  disponible 


I    ~|  Pages  discoloured,  stained  or  foxed/ 

I      I  Pages  detached/ 

r~]  Showthrough/ 

I      I  Quality  of  print  varies/ 

I      I  Includes  supplementary  material/ 

r~n  Only  edition  available/ 


Pages  wholly  or  partially  obscured  by  errata 
slips,  tissues,  etc..  have  been  refilmed  to 
ensure  the  best  possible  image/ 
Les  pages  totalement  ou  partiellement 
obscurcies  par  un  feuillet  d'errata.  une  pelure. 
etc.,  ont  6t6  filmdes  d  nouveau  de  fagon  & 
obtenir  la  meilleure  image  possible. 


The 
toth 


Thei 
possi 
of  th( 
filmir 


Origii 
begin 
the  It 
sion, 
other 
first 
sion, 
or  iilu 


The  la 
shall  ( 
TtNUi 
which 

Maps, 
differ* 
entirel 
beginr 
right  a 
requin 
metho 


This  item  is  filmed  at  the  reduction  ratio  checked  below/ 

Ce  document  est  film6  au  taux  de  reduction  indiqu6  ci-dessous. 


10X 

14X 

18X 

22X 

26X 

30X 

s/ 

12X 


16X 


20X 


24X 


28X 


32X 


)laire 
>s  details 
ques  du 
nt  modifier 
Kiger  une 
le  filmage 


The  copy  filmed  here  has  been  reproduced  thanks 
to  the  generosity  of: 

Library  of  the  Pubiic 
Archives  of  Canada 

The  images  appearing  here  are  the  best  quality 
possible  considering  the  condition  and  legibility 
of  the  original  copy  and  in  keeping  with  the 
filming  contract  specifications. 


L'exemplaire  f iim6  f ut  reproduit  grAce  A  la 
gAnArositA  de: 

La  bibliothdque  des  Archives 
publiques  du  Canada 

Les  images  suivantes  ont  M  reproduites  avec  le 
plus  grand  soin,  compte  tenu  de  la  condition  et 
de  la  nettet*  de  rexemplaire  fiimt,  et  en 
conformity  avec  les  coiiditions  du  contrat  de 
filmage. 


d/ 
iu6es 


Original  copies  in  printed  paper  covers  are  filmed 
beginning  with  the  front  cover  and  ending  on 
the  last  page  with  a  printed  or  illustrated  impres- 
sion, or  the  back  cover  when  appropriate.  All 
other  original  copies  are  filmed  beginning  on  the 
first  page  with  a  printed  or  illustrated  impres- 
sion, and  ending  on  the  last  page  with  a  printed 
or  illustrated  impression. 


Les  exemplaires  originaux  dont  la  couverture  en 
papier  est  imprimie  sont  filmAs  en  commen9ant 
par  le  premier  plat  et  en  terminant  soit  par  la 
derniAre  page  qui  comporte  une  empreinte 
d'impression  ou  d'illustration,  soit  par  le  second 
plat,  salon  le  cas.  Tous  les  autres  exemplaires 
originaux  sont  filmto  en  commenpant  par  la 
premiere  page  qui  comporte  une  empreinte 
d'impression  ou  d'illustration  et  en  terminant  par 
la  dernlAre  page  qui  comporte  une  telle 
empreinte. 


The  last  recorded  frame  on  each  microfiche 
shall  contain  the  symbol  -^  (meaning  "CON- 
TINUED"), or  the  symbol  V  (meaning  "END"), 
whichever  applies. 


Un  des  symboles  suivants  apparaTtra  sur  la 
derniAre  image  da  cheque  microfiche,  selon  le 
cas:  le  symbols  — ►  signifie  "A  SUIVRE",  le 
symbols  V  signifie  "FIN". 


aire 


Maps,  plates,  chrts,  etc.,  may  be  filmed  at 
different  reduction  ratios.  Those  too  large  to  be 
entirely  included  in  one  exposure  are  filmed 
beginning  in  the  upper  left  hand  corner,  left  to 
right  and  top  to  bottom,  as  many  frames  as 
required.  The  following  diagrams  illustrate  the 
method: 


Les  cartes,  planches,  tableaux,  etc.,  peuvent  dtre 
filmte  d  des  taux  de  reduction  diff6rents. 
Lorsque  le  document  est  trop  grand  pour  6tre 
reproduit  en  un  seul  clichA,  il  est  film6  A  partir 
de  I'angle  supArieur  gauche,  de  gauche  d  droite, 
et  de  haut  en  bas,  en  prenant  le  nombre 
d'images  nicessaire.  Les  diagrammes  suivants 
illustrent  la  mAthode. 


by  errata 
led  to 

ent 

jne  pelure, 

agon  d 


1  2  3 


32X 


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3 

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5 

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•,  { 


INDUSTRIAL  CRISEa 


TIlElll  CAUSES  AND  REMIiDlES. 


By  11.  BOW  LB  Y  WILLSON, 

NIG^V    YORK. 


(FROM  THE  REPORT  OP  THE  CONGRESSlONAli  COMMITTEE 
ON  DEPRESSION  IN  LABOR  AND  BUSINESS.) 


18  7  9. 


WASHINGTON; 

OOYBBNMENT    PRINTIifa    OPPICB. 

1879. 


m 


ft-^/ 


-  ■^I-A  ■■     .  ., ^  _  _,^-.'- 


INDUSTllIAl.   CRISES. 

THEIU  CAL'SKS  AND  RKMEDIRS. 


HV    11.    UoWLHY   WiLI.SOX. 


49  WkST  FoKTY-KUiUTH  SrUKKT, 

New  York,  Stjttiimbir  16,  Ih7H. 

'"iKNTi.KMKN :  I  iivnil  my.silf  of  ydiir  kiiul  invitation  to  "communicate,  in  writing," 
»y  vifWH  iflati\t^  to  th<;  Muhj»icL-niattt!r  of  your  invc«tij;atioiiN. 

1.  Tills,  I  utMicrstfin<l,  \h  to  ajHccrlain  tti«  causes,  as  far  h.s  jiossihlc,  of  thi^  present 
dfprcHsioii  ill  the  induslrios  of  tlio  ciounfry,  and  to  rccivivtt  snjjircstioiis  on  tho  siilijcct 
of  riiiic«lic.s  within  tlic  domain  of  Icjjislation. 

2.  Ah  a  stalling  point,  I  admit  Jlui  prtinisos,  uamoly,  tliat  tho  country  hrw  hccn 
passinf^  throiijih  ono  of  thos<(  |)criodic  cris.  .4,  in  HHarly  all  its  in(iiistric*t,  aincc  tho 
panic,  of  Sf'ptcniluT,  iHTtl.  Hut,  at  the  same,  time,  as  a  stiidentof  cci  iiomic  phcnonu^na, 
I  cannot  admit  that  the  causes  which  Itsl  to  this  panic  ditfer  materially  from  those  of 
other  similar  experiences,  of  which  a  larj^i;  unmher  of  hnsincHs  men  ami  economic  au- 
thorilicH,  still  living,  arc  co;^nizant,  and  of  others,  reconh-d  in  the  comm«^rcial  history 
of  the  world,  since  the  coinmencenuint  of  the  present  century.  I  also  qiicsticm  tho 
assumption  of  some  who  havi-  testilied  before  your  committee,  that  the  sta}.  ation  in 
business  since  IHTIl  has  been  greater  than  existed  in  1KV»,  H;}?,  and  Hr)7;  .»  which 
twt>  latter  periods  my  own  personal  reminiscences  extend.  Fnithermoie,  I  am  of  tho 
opinion,  founded  on  my  own  paiticiilar  aM)cali(tns,  and  a  {general  knowltMlgo  of  in- 
dustrial pursuits.  )nore  jiarticularly  in  Ohio,  and  other  Western  States,  and  in  Canada, 
that  tlu'  pre+.enl  <  risis  has  nearly  run  its  coiiixe,  and  that  we  an'  enterinn;  on  a  new 

-era  of  prosi»erity.  Kntertainion  these  frencr.nl  views  on  tlu^  subject-matter  of  yoiii 
inquiries,  1  feel  biuiiid  to  .■ui^ij^est  that  any  remedies  attempted  by  ConjiresH  slu  iihl  bo 
general  in  tin  ir  character,  and  be  framed  with  the  view  t»)  the  pievention  of  future 
ffriwH  by  removinij  or  diiiiiiiis)iin<;  the  intensity  of  their  causes. 

'.i.  1  have  been  ciitjaf^cd  for  a  third  «>f  a  century  in  what  may  l»e  called  raii  "  ly  busi- 
uesH,  as  contractor  and  linamier,  and  shall  contiue  the  facts  I  have  to  communicat'^ 
chieily  to  my  own  branch  of  industry.  My  tiist  labors  in  this  busiiu'ss  were  dir«M!t<»<l 
to  tlu'  furtheriiif;  the  construction  of  railways  in  Canada  and  Mi<hi<j;ait ;  and  in  18,')! 
I  renuived  to  London,  where  1  devoted  some  years  to  raisinj;  British  caiiital  for  rail- 
way construction,  so  that  my  experience  has  iiad  a  wide  range,  .  !ore  recently,  in 
lf^2,  I  undertook  the  constrn<  tioii  of  a  line  in  Ohio  of  considtMalile  Tiiagnifii(!«.,  only  a 
small  part  of  which  is  jis  yet  conipleted,  owing  to  th<>  pani<-  of  1«7:{,  and  that  part  I 
built  last  y<'ar. 

4.  At  the  tiuH'  I  took  the  contract,  in  IHTi*,  there  prevailed  throughout  the  country 
vawt  aitivity  in  the  railway  business.  The  annual  constriu-liou  of  new  lines  had  ris<!n 
to  no  less  than  7, ()t)l)  miles.  This  unwonted  and  vast  expansion  of  the  railway  busi- 
ness gave  employment,  directly  and  indirectly,  in  construction  and  providing  rails  and 
other  materials  and  (Ujuipment.  t(»  not  less  than  one  million  of  men,  rejncsentiug  a 
populati«)n  of  i)rob!ibly  not  less  than  four  millions,  who  li\<d  by  this  vasi  orauch  of 
imiustry.  A  Huperabnndant  j^ajier  currency  had  intlated  all  values,  the  market  valuo 
of  labor  included.  The  «'!ipital  expended  was  i>artly  rai.'^ed  in  many  ot  the  localition 
where  the  lines  were  located,  and  partly  in  Kastcrn  cities  and  in  Kiirojie.  New  York, 
London,  Paris,  and  Frankfort  bankers  rcape<l  iiiimtiuse  prolifs  by  "  floating  loans"  on 
mortgage  bonds  for  railways  sonictinies  existing  only  (ui  pajicr;  and  many  of  tho 
"  land-grant  "  ju'ojectors  simply  divided  the  proceeds  among  them.s.lves,  without  build- 
ing a  mile  of  railufiy.  In  Ncn-th  Carolina  there  were  seven  lines  which  had  bo«in  partly 
buili  by  .S.ilt  ;.,!  iiit^.  wliose  managers  got  the  Stat<!  to  ai>|)ropriate  $l(j,(X)0,(K>0  more 
of  its  bond.s,  under  the  juetcxt  of  "completing  the  State  railways";  and  eleven  mill- 
ions ol  .-HI  li  liinds  were  bnuight  Ut  New  York  and  were  sold  or  hypotheci'tod  at  Irom 
30  to  tiO  per  cent.,  and,  with  only  one  or  two  insignilicant  «xcej)tiontt,  the  whol«^  ca^^h 
HO  raised  was  stolen.  What  took  place,  in  North  (Jarolina  was  repeated,  to  a  greater 
or  IcM.ser  extent,  in  all  the  States  under  carpet-bag  iiile.     A(  cording  to  a  statement 


Iliuili  l>>  ill*  liitr  iluiiur  Clfili^v.  .iImiiiI  iitif  lillliilli-i|  lllilliuiin  of  il<itliil>  of  SMlthrm 
KtiiU'M  IioikU  wcrt'  tlmn  |iiit  on  ilic  niiirkfi,  jiihI  <sit>  <l<>llar  tlM-yvMif  «m(M  ur  |ilril;;«Ml 
for  wan  tolallv  tiiisjipiilirtl  ur  sfDlni  liv  ;;<»vi'  arw.  I'liifcd  StuU'M  •Sfiiutm-s,  iiiciiilttTHof 
('on^ri'HN.  iiiiil  otiicr  I't'dftul  «iiil  Statr  utHriaiN. 

r>.  What  iiiattTiallv  ti  ih!«<1  1u  iiil<nNil\  iIm-  k'"'"-'  luilway  infladon  wfn-  tin-  larR»* 
HiiinH  \oti-il  liy  Cmi^rr.sH  I'lir  hiiliHi<li/ril  lialimiiil  Iiimn.  'I'lifNt-  v,v\f  rallnl  "I'aritir 
lailwavn,"  whrlliiT  lln-y  run  Nortli  or  Soiiili,  Kant  or  WchI  ;  aii<l,  as  tin-  (rovcriiiiHiit 
Ntootl  in  till'  iiimitioii  oi'  M-ioiul-iiiortua^*!  Iioiiilliolilt  r.  tlic  tiiHt-iii<iil;;ai;i-  IioihIi^  wen-, 
in  moHt  cam'M,  as  yood  a^  ;.'o\  n  iiniciil  Mriiritirs.  TIiiih  it  liapiirm-d  that  ijoM'iiinuut 
fnriiiMhid,  in  nearly  all  <iih.'.s,  thr  fnliif  ra|iiliil  vxiirndril  in  tin'  const  ruction  ot'  Honi»< 
thunnands  of  nnlcn  of  lailway.  while  tin-  Npcciiliilors.  I»y  means  of  Cntlit  MohilurH  and 
other  devi(cs,  realized  out  of  the  company's  liomls  and  stock  a  clear  piolit  exceeding 
the  entire  coHt  of  these  HO  called  '•  I'acitic  railways."  It  in  cany  to  perceive  how  th^^we, 
vast  national  and  Slate  jrninis  stimulated  the  Imildinj;  of  other  "  nnsniisidi/ed"  lin<'H, 
and  how  the  t<ilal  expendilnres  inllated  all  other  hranchcs  of  indnslry.  So  Ion .{  w* 
prices,  w  In  thcr  lor  lahor.  or  materials,  or  food  and  clothing,  hiinls  and  tenennnts,  and 
w>ciiritics  continned  to  lise,  cveryhody  (am  ied  they  were  urowin;;  rich.  In  \f*iVJ  I 
puMished  in  Washin^rton,  and  ciicnlatedin  <  on^ressional  cirdeh,  a  pamphlet  entitled 
''The  Seieucii  of  Money,"  in  which  I  ]iointed  ont,  com  i.sely  and  clearly,  what  tlm  iii- 
tlatioii  of  the  curniicT  was  leadiPfi  to.  I  poiiit4-d  out  how  the  market  valiu' of  labor 
<«n<l  jjoodH  first  felt  llie  delnsive  intlnen<<'s  of  snch  a  cnrrency,  ami  how  lands  and 
lionses  followed,  and  h«»w  their  value  woidd  snhsiile  w  hen  the  Imhlile  Imrst ;  hut  no 
ouo  then  li«i«'de«i  smh  information.  I  allmle  to  this  lndchuie,  because  the  renwMli*'^ 
for  fntnre  ciises  must  he  founded  on  a  radii  al  (  haii^^e  in  oiir  system  of  hanking  and 
the  methods  of  is^ninJ^  cnirency ,  wherein  the  incijiient  causes  <if  crises  have  their 
origin. 

♦5.  Th<iiif{h  railways  stood  most  jnoniimntly  forward  in  the  list  of  causes  leadiiif^  to 
the  jtani<- of  IH7:{,  and  l!ie  stH;;nation  that  li.is  sijne  existed,  all  other  industries  par- 
took of  the  intoxicatin;r  drau>{hts  administered  hy  the  national  ami  other  hanks,  and 
tlip  jnoveriuneiit  itself,  and  the  "c.irjK't-haK"'  State  adniiuistrationit.  To  illustrat«^  the 
••ff«i('t  (ui  the  <ost  of  railways  and  the  wages  cd'  railway  "»  ivvi«'s,"  I  must  return  to 
my  efforts  to  c(uistruct  the  line  in  Ohio  in  I'^T'J.  I'rior  to  the  overissue  of  national- 
])rtnk  notes,  after  the  estahlislmient  of  tliat  system  in  Ii^U.  the  rate  paid  for  skilhtd 
■  ahor,  on  railways,  was  alxnit  $1  a  day,  or ^'Jt!  a  mcnth;  and  the  pii(e  of  iron  railn,  in 
Oliio,  was  about  f4<>  a  ton.  The  pricl^  of  laborers'  board,  before  the  war,  was  ahont 
$2  a  we^k.  In  1H72  similar  labor  was  ^-i  to  ^"J.'J.'i  a  day:  board,  ^1  to  !jj.")  a  week;  iron 
rails,  jMt  a  ton;  ami  all  other  materials,  including  engines,  cars,  Ai'.,  in  proportion. 
I  now  come  down  to  present  prices.  Last  year  I  |»aid  |<l  to  iBl.lo  for  '•navvy*'  lahor; 
for  board,  ^\  to  SM.oO  a  week:  .*:{;'>  a  ton  lor  iron  rails  at  mills:  ami  m>w  1  havp  ottorB 
of  labor  at  HO  cents  to  SI  a  day,  or  ?>'2(»  to  .'J'Jt!  a  month  :  board  at  tfi.'id  to  '^W  a  we^'k, 
and  bootw  and  clotliing  at  ante-war  iirices;  and  iron  rails,  for  cash,  at  mills  in  Ohi»), 
per  ton  of  'i.*i4(>  jainnds,  i^'X.\. 

7.  TluuioHt  of  railways,  like  the  cost  ot'  liouses  in  cities,  wuHinore  tlian  dotihlo,  during 
the  period  of  inflation,  what  they  «an  n<»w  be  built  for.  Lea\  ing  the  "  wati-ring"  pro- 
cess out  of  sight,  a  .standard-gauge  line  cost  about  $'.i.'),tKIU  a  mile  in  (Miio  to  build  and 
equij)  during  those  days  <tf  greatest  inflation  ;  and  the  speculators,  bankers,  managers, 
an<l  promoters  adtled  $'2.'), dODpermile  more,  and,  in  some  cases, ,?;:?'),((( 1(1,  for  their  profit*. 
Now,  lean  build  an  average  stamlard-gatige  lim'inOhio,  oralmo.st  any  WeHtern  State, 
for  fnmi  $H, 0(1(1  to  itil(l,(l(l(l  a  mile  casli,  including  all  materials,  but  ex  opiipment.  But  it 
is  tnoro  ditticult  to  raise  |I(I,(KI(>  a  mile  now  than  it  was  then  to  raise  i3;2.'),(l(lO.  G(K>d 
snhstantial  narrow-gauge  lines  over  an  average  of  Ohio  country,  laid  with  ;ir>-pound 
iron  rails,  can  at  juesent  be  built,  ballast«'il,  and  fenced  for  frmn  .•S(i,(KI()  to  .|7,r»00  pei 
mile. 

8.  These  facts  fre  both  interesting  and  instructive,  as  bearing  on  one  of  the  largest 
hraiuihes  of  «Mir  industry.  Onr  railway  system  is  less  than  half  eomjdeted.  The.  |>e<> 
}>le  perceive  that  by  putting  their  own  means  intocheaji  inirrow-gange  niilroads,  thev 
<'an  make  them  )»ay.  Ilenci"  there  is  in  the  West  (piite  a  revival  in  the  coi'struction 
»>f  these  cheap  lines,  hereafter  destined  to  take  tlie  place  of  <;ominon  highways,  to  a 
large  extent,  which  will  serve  as  fet-ders  to  the  old  standard-gauge,  highly-watered 
trunk  lines.  Let  me  here  suggest  to  your  <;omnnttee  the  desirability  of  constituting  a 
national  railway  dci)artnn'nt  after  ihe  ino<h'l  of  the  Ihitish  Board  of  Trade,  but  with 
mcne  comprehensive  y)o\veis.  If  there  is  no  warrant  for  siudi  a  hoard  in  the  organic 
laws  of  the  inition,  then  let  Congress  take  m -asures  to  ameml  those  laws.  The  civili- 
zation and  ])ros)ieiit\  of  tuitions  an'  in  the  ratio  of  their  facilities  for  transjiorting  per- 
sons and  jtroiMTty.  The  National  Legislature  is  less  likely  to  abus<'  such  ]»owers  than 
State  legislatures,  wliose  members  are  ''  bought  and  sold  like  sheep  in  the  shamhles," 
by  speculators  and  cajtitalists,  for  money  and  interests  in  public  undertakings.  W« 
know  from  nncjUestioiied  testimony,  before  a  Senate  onmmitt«'e  in  tliis  State,  that  over 
<me  and  a  lialf  mil1i<m  d(dlar8  were  expended  hy  two  great  railway  companies  to  in- 
fluence legislation  in  a  single  session.     Meiuhersof  C'ongress  will  hardly  again  become 


inoMlliffH  of    rriiht     Moliiliir  ii)mi>JlMii'H.       Hut    it    !•<  i|MJt,.  f;».^;,    Ik  -n  cnli.fi  :ict  f  lie  bII>{- 

^♦vHft  <l  ijiilwii.v  ill  |i,iriiiiciit  iiH  ti>  Uti|»  it  *'lii\i'  r:i'^ur'»w  ill — almvi'  xii.H|ii«ion." 

'.».  It  will  III'  rnKjiiii/.iil  IIS  Ik  jrniif.  ifiint-  ji.  mII  rviiliiit  truth,  tli.ii  wiicii  we  liikv«t 
b»'»'ii  111  til-  III  sill  1 1'  am  iioritiitivijy  iIk"  ciiusis  iiiiil  ifVi-its  ut'inii  rui;viir:;il  irisin,  w  itii  if>« 
li>ii<;  rlitiin  of(|isu«ti|.i,  tin-  wiirk  of  iiHJiiNti  ii'N.  iiml  tlir  liiiii  ml  Miiiiil  min  ntti'tiilaiil 
tluri'tui,  \\i'  liiivf  iMiJv  I  nil  I  illnHtiiiliiiii  a  liiifW  ot  «'\  its  rrsuiliii;;  ill  In  i  t'liun  i)iiil  jpyis. 
I.'itiiiii  1)1'  liir  iin|iri  Iri't  iiiiiH  il  liiiiuiiii  Mix'ii'tv.  Hilt  liiTi'  I  liiisi'  tin-  ijiii'Mt  uxi,  aro  nut 
tho.si'  iin|ii-rt'i'rl iuiis  t iir  irwuil  lit' laws  niaiU-  to  oM-rriilr  ihr  iimIuijiI  la\SH?  'I'linsi*  wlio 
fiHv»'  iiful  till-  ili'li:it".s  ill  llir  |{i  II  isli  l|oiisi'!«  of  I'arliaiiii'iit,  ami  I'C  (Niiii;ri>f4s,  siiuM-  tho 
coiiHiilriatinii  lit'  till'  laiiioi's  I'lilliuii  lvi'|Mirr,  in  Hln.  uii  tin-  n  rimi'iiii' ol  rarli  of  llin 
Kii-at  iiiilnslrial  irisiM,  nuist  lun  mrivtil  at  tln'  roiuliiHiuii  I  lia\r,  tliat  i-aili  tiiiil  all 
of  tliriii  luiM-  liait  a  toiiiiiiiui  nr  ill.  It  iiiiiy  lit;  laid  down  an  an  iiuniiitaMi'  law 
of  iiatuir  lh:it  '•  liki-  i  auscs  luriilr  like  I'tt't-rts  "  Li-I  llio.si'  wlm  haM'  nut  thi'  tinn'to 
waili  tlirnii^ili  imiiMim^  noIuiihm  i  I'arlianiiiitai  y  anil  ( 'lllly,|■l■N^illnal  ili-liati'H,  at  ImiMt 
r»>ail  til-  w  iiiiii.i.s  ami  H)ifi'rlii>ti»f  Jrtl'i  r>iim  ami  Maiii.sKii.  Ilaiiiillun.  <  allniun,  Widisti-i, 
ami  Mi'iilmi.  tlir  mastrr  iiiimls  ol' past  yi-iuTaliiMis.  ami  *'.s|irriall\  •il'tlii  fliirr  la^*t,  hn- 
twfiii  I'^l.'.  ami  ]">•*,  ail'!  tlirv  will  |Miri-ivi-  ii  xsi  ili-arlv  lliai  iIhni  iriMS  ari' iliu',  to 
banks  III  ixsm- anil  ilisconnt.  TIiih  ronrliiHioii  'I'  ;jii-atly  nairuw  tin- limit  i  of  iiivi>H- 
ti^ation  on  tin-  jiart  of  your  t-oiiiinill>'i'. 

111.  I  lay  it  <low  n  ut^  a  fiiiiilam«-ntal  prin('i]ili-  tliat  titlirory  or  a  fart  ili-iiioiistratt<(l  l>y 
iiiatln  iiiaiics  or  liy  tlio  sriciiiiMif  lo;;ii'  Ih  nioit-  rrlialilr,  iiion- to  Uc  ili|ii'nili-il  mi,  lut 
thu  liasJH  of  ii-yislatioii,  or.  if  you  liki-,  as  an  ai  ri'|iti  il  ilfHtriin  in  |>oliiii  a!  sriiiu'o, 
tliHii  I  iirii.ssiini|)tioiisofi-ni|iiririsni.  I'aii)iiriral  nasonin^  is  i^rm  rally  ilrawii  Iroini'iM  li 
iii.'mV  |M-i'Minal  rx|(crii'nri'H,  Tin'  slati-sinan  or  llir  lt';iislalor  who  fiami's  his  law-,  on 
tlir  ihroriis  of  •' prarlical  nu'ii,"  is  |)riit.\  riit.iin  to  liml  liinisi'lf  in  I  Im  |>ositii>n  of  lli»< 
oil!  num  with  his  hoy  ami  tin-  as,-,,  in  tht"  fahli — of  tiyinj;  to  pha.-f  I'Viryhoily.  Hut 
no  lii-Mi-r  illustration  ran  hr .^ivi-n  than  that  |ii'i-s«-iitoil  liy  tlir  iinnii'roiis  no.Htrnins  roc- 
oniini-nili  i|  liy  a  laryc  niiinhrr  of  *'  lahor  rofoiiin-irt  "  iiml  otln-rs,  to  your  i  oiniiiitI,»t\  for 
ri'ini'ilyiiii;'  tin'  pii'smt  Htai;natii  ri  in  liusini'ss.  No  two  ai^ni- ;  ami  it  is  not  doiiiij  vio- 
loiiiT  to  iriilli  III  say  that  four- lift  lis  of  llii'sc  nosi  niiiis  .-iri'  tin-  vi-rii'st  nuusriiM'. 

1 1.  Sialistiial  larfs  an-  valualilc  only  so  far  as  tlii-y  siivi-  to  i-sialdisli  loiiiral  diduo- 
tioiiN  t'loin  know  II  raiisi's,  oi' to  illnslralr.  fumlanii-nt.tl  primiplrs.  I  havi-  fril  it  m■■'l>^t- 
Biiry  to  lay  down  tlii'si>  ijjiMii'ral  propositions,  hccaiiHC^  I  w  isli  to  luiii^  this'pn'stion  to  tlit» 
t»!Mt  of  ilosi'  lo^iral  rrasoiiinj;.  'riiriiinjf  to  tli<'V,''<'iit  I>anir  of  1~!{7.  wr  liml  that  '*  on  .(an- 
uary  I,  l."^:!?"  ( 5  ipiotc  Mr.  Spanlilin<;'M  Ci-nlrtinial  addrrss  to  tlm  Hankirs'  AMsoi-ialion), 
"the  hank  rirr illation  of  thrrounliy,  arcordinji to tlii'TrrasiiiT  rr ports,  w'as!S14!>,0iM>,(IOlt. 
Hy  Jamiaiy  1,  l-^i:;,  it  was  irdmi'd  lo  .ti.'i^.lK  OlMi;  a  ruinous  I'.i!)  of  piiiTs  wa.s  tin- con- 
xri|Hi-iii  I  .  "  (Joiii;^  hark,  Mr.  Spanidiiiji  tills  ns.  "in  tin-  .iim'ii  yl■ar^'.  from  Irtlili  to 
Iw  I?,  no  less  than  :!lil  muv  h.inks  sprang  into  t'xiNtiini-.  w  ilh  a  nominal  «!,if)it.al  «/f 
$1  |.->.itiMi.tMH),  and  .■SV,t.(MlO,iMH»  ,,t  additional  ciidiliitioii.  •  *  *  Tho  loiitus  iiior(^aH»>d 
from  tf>(i(i.(iiiil.ll(Hl  III  $  ,v!.'., 1100, til 'II." 

I'i.  I'lii'ii  canu'  the  ;>ri'at  rollapsi- in  a  tiiiuMif  profound  piiiir.  ThiTc  had  lu-un  no  dn- 
v.astatiiiti  rivil  war,  no  waste  of  lahor  or  cipital  »  ipiiid  t<i  di-slrurlion  insti-ad  of  ]»roi. 
liiiction,  ami  not  until  tin-  lap.sn  of  live  vi-ars  did  tin- coiinlry  show  Ki;ius  of  vt'vovory 
from  it."  ajjony.  In  M4;{,  <-'liiirli'.«  Miiki-ns,  wriliiiii  from  Ohio  to  his  fiii-nd  .John  ForsU'r, 
Huyw,  "'I'lirri-  is  no  money,  alisoluiely  no  money  in  the  eoiintr\."  Me  found  tlio  newti- 
pajiers  Idled  willi  aiherlisement-^  otIiTinti  yoods  iii  e.xehanue  in  the  m.aiiiior  snpponrtd 
to  havi^  hei'ii  done  in  the  nider  periods  of  soeiety.  'J'raile  was  ouee  moi-e  eoiidmtiMl  hy 
barter.  Men  f^ave  their  labor  for  boots,  shoes,  ('.iothin;^,  ami  food.  At  the  jiriSHnt 
time  men  an^  to  he  h-id  by  tens  of  thousands,  payable  in  food,  eioth'iij^,  and  lodyinj?, 
beeaii.se  there  is  uo  eapital,  not  m«/i<v/.  t'>r  there  is  plenty  of  that,  to  pay  tliem,  or.  at 
leiihf,  none  that  is  available.  Mr.  Siiiiuidini^observt'.Hof  the  pjiiiii;  of  H.")7,  "This  crisiH, 
like  tlu^  revnlsion  of  l."<:{7,  was  eansed  by  too  j^reat  an  expansion  of  eredit.  I>ebt  iitall 
forms  became  excessive.  'l"he  railway  system  had  beeome  laijjely  extendotl  upon  biir- 
rowed  eapilal.  There  hail  been  excessive  importations  of  l'oreii;n  i.joods.  The  ba.nkH 
loaned  too  inneh  of  their  funds  on  stocks,  bonds,  and  other  securities  that  eoiiid  noti4>o 
readily  ciinverted  into  nioney  to  meet  checks  of  depositors." 

l:!.  When  we.  read  tlui  descriptions  of  ihiii^H  aw  they  existed  just  prior  to  IB!{7  anti 
1857,  and  coinpaic  tlieni  with  that  of  H7:t.  it  .soimds  "like  an  oft-told  tale."  Tho 
national  irovernmeiit,  after  lillinix  all  the  (hannels  of  circulation  with  an  irrede«Mnablo 
p.'iper  issue,  added  dnrinji  t he,  closinji;  year  of  the  war,  hii  the  iftniion  of  the  7iational- 
hank  Hiixtcm,  uhmtt  t;!.. 0,000,0(10  to  tin:  then  crixtiiitj  htivk  ami  Trraxui'if  rirrnlationH,  and 
based  the  vhide  bank  issue  on  public  seciirif ie.s  instead  of  metal.  'I'o  cap  tho  ("lilnax 
of  folly,  after  Mr.  Me(,'nllocli  liad  taken  out  of  circulation  $14,000,(100  <d"  national 
notes  issued  direct  to  th«i  pnblic/,  instead  of  tlios*^  loa'ied  to  the  banks,  a  new  isniie,  of 
^M.Ooo.lloO  was  authori/eil  to  be  made  to  ami  throu<^h  the  banks,  in  1H71,  under  tho 
absurd  pietexf  of '' equalizing;  the  currency." 

14.  Thus  it  w  ill  be  tteen  Congress,  by  a  law  for  which  there  is  no  warrant  in  tho 
Oonstitulion,  anthor#PH  the  londinj^  of  the  national  credit  in  the  form  of  "national 
purreney."  at    I  per  e»mt.  per  annimi,  to  banks,  which  ajjaiii  lend  it  to  tho  public  at 


7,  H, '.»,  or  10  jirr  «fnf.,  iHTonlinif  Ut  the  r;it<'  allnW'tl  Hiul  ftn'v:iiiiriu  iii  the  wxri*.! 
Ht»f''!».  Th«'  iHKiii' nf  piifi.r  rnowcy  on  s^ovmitfH  til  m.  iiriiityi,  iw*  in  llir  niMiol' iht^  H.iiih 
of  Kri>rtjiti<l,  iiM  ft»  C  ir..(HH»,(Mlu,  ;»nll  t»i  th<'  ii.iiiiMi.il  h;iiikM,  or  on  no  H.i(nritif««  at  all.  jh* 
finuluiiHMitiil  i-rror  in  im.n.-trti  y  tnoiioiny.  I'^por  iiioih  y,  Moiciilihcully  ntianli*!,  i»t 
Mimiily  A  HiiliMtitiitr  tur.  :imiI  h  iiuhk  coiivfiiicul  tool  lliiiri  mcljilli<'  iiioiify,  on  \\|ii<  h  it 
Hhoiild  iilwivyH  ri'Ht,  :iiiii  liki-  inctHlii<' luoin'y,  tiio.slt  l.-ariy,  hlioiild  \>f  iKKiinl  l»y  a  <lrfi;,irt- 
in«'iit  of  NtHfi',  iiinl  itH  voliiiiH'  tun  only  Im  nmiliitrd  l>y  Hujiply  :iii<l  ilfiiiiiiiil. 

Ifi.   WhtMi   li'ft    to  tlu!  <lisr.r<'lion  of  liimkH,  iio\iriniti    l»y  tli«-  Htiony  iiioiivi-  of  Bftif 
iHf«T«'Mt  liiul  prolit.  tlii'tr  JH  I'viT  !4  Ifnilcii.  y  to  ovitIsmh-h  ttiiil   iiilhilion.      I.onl  Ovnr 


utoiii-   itii  iililo  \vnt<T  Hiiil  »lo!^'  iiml   iii;<iiiHl«  oliscrvcr,  wayf 


It   i 


M   now  ilim-oN  < 


ir«<J 


thtT*'  JH  a  lial«i!ity  to  ovirissncH  of  pupiM    looin-v.  wliilr  tliiii,  im>in>  ih  ^•ollVl■rlilli«^  ut 
■will."     Mr.  .1.   h."  MrCiiIlorh.  in   liis   noton  t4>   tlm  "VVi-ullli  of  Nalions."  Kays:   "  I'li*" 
wi(l<'Ht  t'X(n'rit'ii(<' provis  that  no  iiiiin  or  mkI  of  incii  nvor  liiul   lln'  powi-r  to  iii!ik»'  iit 
«'oiiv<Tliltlt»  iHsiH'H  of  puptT  mi>iM>y  wilhoiit,  alniHinic  il — that  is,  without  isMiiiiiir  it  in 


iiiortliiiali'  t|iiantiti«>s 


i'ho  n^-xtiiK't  nil  nl  tit  t  In*  n-Mtriclioii  on  c:\!%\i  pH\ ni<-iit«« 


Ht  th»i  Itjink  t»f  Kii'^laiul,  uii'l  tho  riin«itTiii;j  il  pii|M'liial.  would  havi'  no  p«icfptil»l#- 
«*fl«'.<',t  on  tli«'  value  of  liaiik  uoIih,  proviih  <!  tlnir  i|uaiitit.y  wt-r*'  not  at  tlir  khiiu',  t'Mi«- 
in<'r«MW*t<l.      Kill  thvn-  rannot  hr  r  duuSt  t^tit  nndir  xmh,  lircnmylamrK  il  would  ht  iiuri'iiMCil.'' 

H'l.    !>aiii<)l  WcliKtcr,  liki    I.onl  (»V(|hHiiii>,  naiil:  "  Kvt-n  ronv<  rtihilily  is  no  nu>»r»n- 
t«<4'  HjjairiHt  <)vi»ris.snr.."     IN-  v^.'ih  spi-Hkinj:  of  l>anks  and  tl\i>  «'HUr«i'«  of  irises  when  he 
ina<le  thiM  leinark.     The  New  Vork  Tinies,  the  most  inllexiltle  advocaie  ol  the  pres«'nt 
lime  of  hank.H  of  issue,  in  its  le;vder  of  the, 'JOth  Septeiiilur,  liilly  eoneedes  this  histxir- 
ivikl  fuel,.*     As  I  havt   helore  oliserved,  fhe  triM''  seieiitilie.  method  of  nuardiiij;  paper 
money  is  in  the  lijrht  of  a  niore  convenient  tool  than  nielallie,  money,  and.  ax  Iht^  pub 
/(/;  htm  to  pay  tktt  JuHfaa:  ralui  I'nr  the  nvtii^  Ihfo  rii/uiri ,  ilx  ixHUO  nhmld  he  mnorid  whollf 
J'r<nn  brinif  (ht  xuhif^t  inaltir  of  profit  to  prirate  ,»•  />Hblii'   xxtun*-      Kx<ept  aw  to  tlii\  isHite 
of  thr>  Hunk  of  Kn<.'l:kiitl  of.at  present.  £1."),0'HI,(MMI  sferlintj  on  sec'initieh,  the  issue  of 
the  bunk  is  a  Htut.«'  issue,  and  the  iiote^  are  ull  l)ou;;lit    iml  puid  for  hy  the  puhlic  or 
hunkers  lor  use  in  their  liusine>iH  at  and  for  their  faee  \alue  in  >jolii  coin    or  hnllion 
The  issue  on  secnritit^s  isu  violution  of  the  hi;;hivst  fundamental  priiicijile  of  monetiiriir 
H«^ii  nee,  whioli  de.munds  u  paper  currency  founded  on  lhi<  iiietul  most  stuMe  in  it.s  mar 
ket  vftino  in  comparison  with  other  siiitalde  metals. 

17.  Thin  principle  may  he  thus  jiustulaKnl:  "That  which  is  made  h\  law  the  mcv- 
ur«  of  ull  other  values,  iiicludinir  ihat  of  lahov.  should  lie  of  the  hi;;he**t  known  slulul- 
ity  in  its  own  murk«<t  v.-ilue,  umoni:  tin   metuls  suituldc  lor  <-oinaiie." 

IH.  The  issuo  of  nrdes  on  securiiiiM  may  he  renanled  a^  a  plan  wlierid>v  a  small  claMN 
«»f  capitalists  arc  cnahled  ti»own  or  possess  themselves  ct  a  iiKitituhle  investment,  and 
ut  the  HunK"!  tiriui  to  Jiave  if(>  percent.  o<  its  line  value  in  money.  1  hold  that  dm- 
Hre**  luw  i\o  {Miwer  under  the  «'«HistittJtion  to  trniiit  such  u  ]irivilefje  to  u  small  cliisw 
of  luvored  inve«foi-H  in  ^^oveniment  bonds  t.<i  tin  exclusion  of  all  tdher  members  of  tin- 
eomniunity.  The  jilan  of  Icinlint;  the  public,  credit  to  nution.'il  bunks  in  the  fnrm  of 
"  national  eurr.'ney,"  for  which  the  (jovenimi'nt  acts  as  trnstei — no  odds  how  fjood  the 
WHMirity  piven  mav  be — isu  vi<»lation  of  that  jjnat  primipleof  human  ef|nality  s«'t  forth 
iu  the  Duclarution  of  Indepirndenec,  which  Hintnld  stand  like  a  second  Ma^na  Oharta, 
a  bnlwurk  against  injustice  and  oppr»'««ion,  "All  men  are  bom  fn-e  and  equal."  If 
there  is  any  sense,  any  truth  in  tliis  propowition.  Congress  continually  violat4's  it  by 
making  laws  in  favor  of  chvsws — laws  which  make  the  lahorin^j  majority  "the  hew- 
ors  of  w(Mid  and  drawers  of  water"  to  a  favored  few.  Thi'seare  iiii>h  moral  and  polit- 
ieal  considerations,  cominfi  within  the  sixipe  of  your  inquiries,  •gentlemen  of  the  com- 
uiitt'tM)  on  labor,  and  their  bearing  and  rtdevancy  to  the  pnvM-nt  and  future  of  our 
indnstries  cannot  be  overlooked.  I  therefore  quot^»  iu»  appropriate  the  postulate' 
formulat^'d  by  Daniel  Webster,  as  indicative  of  a  sound  n»etho<l  of  providing  a  j>a{'er 
ennrnry,  now  an  indispensable  neeetwity  to  the  indnstrial  w(»rlri. 

19.  "It  is,"  said  the  ilhistrions  MasnachuHcttH  stat4sman,  "the  constittitional  duty 
of  government  to  see  that  a  jirojier  currency,  suitable  to  the  circumstances  of  the  tim»*. 
anti  to  the  wants  of  trmleand  bnsiue«s.  hh  well  as  to  the  payment  of  the  debts  «lne  to  the 
govcrnmeut,  be  maintained  and  preserved  ;  a  cnnrency  of  general  <',redit.  and  ca]>abl«.- 
of  aittiug  the  operati<uis  of  governmeut,  so  far  a.s  th<»se  operations  may  be  condnct«xl 
by  means  of  the  circulating  medium:  and  that  these  are,  duties,  therefore,  devohiug 
on  ('tmgress,  iu  relation  to  curn-ncy,  beyond  the  Vierv  regulation  of  the  gold  atid  silver 
coinH." 

*  Tlie  TiniPi(  r<'niHi)<H  as  followH?  "Duo  fiMSt  wiiich  g«x-«  fiiither  tliiin  any  othet  in  expluiiiiiiu  the 
pr«!Hcnt  eitaation  iH  (hat  thori^  li:i«  never  N^-n  any  Ion ^  time  within  the  la»«t.  hrtlf  r>'Ututy  when  (he 
whole  roiinlry  hiwi  a  muinil  currency,  tlmt  In,  a  ciiriency  of  coin,  iir  of  papet  c-iin-  ertilile  HnifhubituHDv 
Convened  into  rein.  P<ir  the  Inst  sevent'X'n  yearo  thnrt*  haH  biM'u  no  8uch  currency  whHtever.  Pre- 
(■♦Mling  the  oiithreMk  of  the  wat  hy  onl>  between  tliree  and  fi'tir  veiirH  came  the  'crflsh  '  of  1W)7,  which 
'was  aoconipaniod  by  a  suapnnHioii  of  Hptsle  p»yiuentn,  and  which  had  been  caused  by  an  HnorniouH  in 
tiatiou  of  credit,  inctuiliuj;  that  moat  insiducus  and  dani:ei'uuB  furrn  of  creilil,  banknotes.  And  hefoT* 
tliis  period,  back  to  the  recovery  of  ihfi  oountiy  fiona  the  w:ir  of  1812,  th«re  was  8car«»<ly  a  year  wliet. 
banking  wax  not,  on  tho  whole,  irriiguliir,  wl»»n  a  large  riuantitv  of  notcH  wil-e  not  in  eircnliitinn  with- 
out the  Hpecie  to  back  them,  or  wbeu  the  oou^atry  wm  favortMi  with  a  thoroaglily  sound  njid  prudent 
inauaireiuent  of  it*  money  affairsi." 


.^#t%%    ■       "^ 


all  cInMH 
■nt,  and 
lit  Clin-. 

til  i-.l.lSH 

of  th.- 
f>rm  *»f 
•ltd  the 
t  forth 
hi^rtit, 
."  If 
it  by 

poljt- 
coin- 
f  our 
tiilaU- 
pafxT 

il  dnty 
m«*'. 

lo  th.' 
apahh; 

lu  tod 
t)l\iij^ 

Nilver 


inu  the 
icii  vhe 
)ituHl!v 
I'r.' 

which 
10U8  in 

bcfoT* 

with 


WO.  I  huvf  nhitwii  \»  liiu  I  ••UKtitiit«'H  "a  proprr  tiirniicy,"  iiuimlv.  u  ciirmicy  i»>mi<<d 
l>y  n  iiiitiniiul  «lr)itirtiiM  iit,  to  ull  roiii*-rN,  tor  ;rold.  I  Idim*  nIiovmi  ilmt  hnrikcrH  nt  mot 
on  any  pi' text  lifiiljnwrd  (o  iradf  aiiti  f<|>«'«iiliifi' on  KiM'h  iH-,tn  s  .it  th.' cxpiiiHc  cf  lln- 
who'r  projdf,  lichidt  N,  iiiid  loflii'  injury  «>f  iion  ist»iiiiig  huiik.s,  vshuh  rondth-t  u  liirge 

oiiiil  ot  the  Ir^iiiiiiati'  ImNJiirHh  ot  the  roinilry. 

U\,  Itrtdri'  |l^lu^)dill^  to  point  out  oilii  r  <'aii.'*<  h  of  iiiflatioit,  arisiiu!  '*' mi  had  hiink- 
Un,  I  rfHpi<  tliill\  Miuntot.  an  fln'  \u\1  nIi-ji  towards  tin-  j>ri'snilioM  (>>  t'-.-  as(  nlaiin'd 
<'aiiH4'H  of  t'l°l^«'^,  lliat  ;  our  «oiiiiriilt<  I-  (im.-'idi'r  tlic  |dan  I  h;i\i'  inittly  oiit!iiM'<l,  id'coii- 
Kti.iilin^  a  national  i>Hn»'  «l<parliinnt,  iiid«p«  ndtni  of 'I'nasiiry  I'lol  |ioliti<a!  parly 
iiitliit'no'M.     W  f  lijiM- iilri  ad\  an  ••xcfih'nt  Moikin^-ir.Mlcl   m  the  natioiuki   insiM- -■'*'■■■■ 


:;iid  < '<iiii|itrolli  )'.''  i>)  I'lulnM'nt,  ^^  liii  h  hav*' i!lv\  a\  h  )>'    ii  i'.ouiHtlv  niid  aldy  nianaf,'<'d. 

Ihit  Milt  '.1  a  di  paitiiiiiit  xlioiilil  not  he  iiii«lrr  tli<'  inlliirin  c  and   rontio]  ot'  thx  Min  mii-r 

of  )'iiiaii(i  .  and  slioiiid  lie  rfslricird  to  I  lit-  i^siu'  and  -lalf  <d'initf«  tor  ji»dd,  iift«i  t''t) 

inanncr  td  tin-  Kank  of  Aiiihti  idaiii. 

Tht-rr  in  a  HiihMtaiitial  dintinilion  iM'twi'tii  iiirrriKy  and  iiiiaiici'.     Thi' ono  Ih  n /oo/ 

<d'  iiidiiHt!\ ,  I  III'  othi  T  u  i»tn  (MX  or  inrthud  of  i-ondii.'i  iiijij:  I  ho  l»iiHiii('s>  altaii'*  of  nations, 

Ntati'H,  coi'poi  at  inh",  and  iiidi\  idiials.     'I'hc  ti'iii plat  ion  to  nsi'  the  isxur  of  paper  iiionoy 

to  cri'irti'  ri'SMiiri  cN  ninsl  ^oon^■l  or  lait  r  lie  w  Ih>)I>  iriiio\  t-d  from  tio-  thoughts  and  piir- 

poM-H  ot  t hosi-  \>  ho  iii:inai;i'  the  hiiMiii'ss  atfaii.'<  nt'  nal imiH  and  liankh.      If,  alter  uim)'Io 

r\p«'i  iiinc,  I  III-  ni.inaiii'i  N  of  1  ho  Im  iii'  dopaitnirn'  lind  ihi'm--olM'H  pos.srr,.s(  d  of  u  larger 

Mii|ipl\  of  niiialihan  is  nri'dfiil  to  inr«nri' tlir  ron\ri1il>iliiy  of  the  national  notiM,  ti«'- 

voiid  pi  radvi'iitnri',  thi-y  Nhoiild  have  power  to  inveHt  hmiIi  miii  pins  in  piihlie  HeeiiiititH 

heaiiii^j;   inteiesl,  and   to  iei>«siie  the  >*aiMe,  or  new   ones  in  their   plaee,  lor  temporary 
; r ...i: .1 1: ti 1. ......  ..»' 1. 1  .;..' 


iporary 
pill  poses  ill  ease  of  an\  unforeseen  enier;>;eni'\  deiiiandiii;^  the  piireli-ise  id'  ^old  to  main- 
tain specie  pasnieiiis.  To  )iiit  siieli  a  s\ stein  into  iipeiMlinn  would  leiiiiire  tinu' and 
thitu-st  piaetieal  and  ihinrelii  al  know  liilf;e  ot  tin  cunnlrv  and  thetraineil  skill  of 
those  ill  ready  in  the  i  inplov  ot  t  he  TreasiirN  i;.sMe  ih  part  in<  nt.  I'he  enrrene.N  ipieKl  ioM 
has,  next  to  slavery.  Iieen  the  most  agitated  and  iliseiis.-^cd  id'  aii,\  o|  the  j^ieat  ualional 
iMNi'ew.  and  is  now  hy  far  the  most  pioinineiit  ImIhic  the  p»  ople.  Ileiiee,  re^ardirij?  it 
as  I  <lo  its  one  ol'  the  lejidin^  elements  inv  ol\  I'd  in  industrial  crises,  I  hope  I  shall  in: 
excii.sed  for  tile  iiioininenee  I  am  ^iviiiii  it  in  this  eonmiiiiiioation.     The  time  is,  I  trust 


exeiiseii  lor  ine  nroitiinenee  1  am  ^ivinti  11  ''<  'iii'*  lonMiiiinioaiioii.  1  ne.  nine  is,  1  irnsi 
and  helii  ve,  at  lianil  w  In  n  it  will  hedivested  of  Jil!  I'liiidann  ntal  irvors  ;iiid  the  pas- 
sion that  enters  into  piiMie  diseiission  whenever  it  is  im  n'iot'.ed.  'I'he  nionii  nt  the 
iiat  ion  cuts  loose  liiPin  .'ill  eon  nei  lion  with  hanks  ol'  issue,  a  >•  siicli,  the  ii.llation  doi;iii:u« 
will  yield  to  coiiinioii  scnsr.  The  o|iinion  ;iaiiis  uronnd  that  the  issue  intist  he  ii'adi' 
hv  the  nation  and  for  the  nation's  heiietit.  and  not  for  the  special  piolii  ot  a  imie 
handful  of  hankers. 

'i'^.  i  have  here  to  niiiaik  on  an  iinportant  example  to  sliow  how  iniieli  a  well-remi- 
latoil  not*'  issue  has  to  do  in  averting  intlatimis  leading  to  crises.  Fraiii'e  has  Ihm-ii 
i*pe<  iaily  free  fioni  these  '•  liiianeiitl  eyi  hmes"  for  half  a  century,  under  the  i-siie  of 
noi»»  hy  the  Ihink  o|  I'lame.  I>iirinif  the  <rr<'at  panic  ol'  l^.'>7,  when  the  i.»nk  of 
Kny;lani.l  noniinall\  siispemled  under  an  anthmi/'alion  (dilu- jiDverninent,  and  rnade  a 
wreck  of  a  \  ast  nninher  id  Imsiness  houses  hy  iiinniiifi  np  the  rate,  there  w.is  sr.ii<ely 
a  ripple  prodneed  on  I'nneh  tiiiaiu'ial  waters.  There  wa.-'  no  run  on  h'reiieh  hiinkeis, 
and  the  (reneral.  indnstrieM  remained  iindistnrheil.  That  and  other  e\iin|des  nUttw  tlio 
ditl'ereiice  hetweeii  a  single  isMUei.  and  two  thousand  lonijietini;  national  h^nks.  in 
ln7;l. 

y;i.  It  has  heeii  f  entitled  lie  fore  your  ennnnittee.  1  riily.  that  crises  are  de\  eloped  1:  rider 
eiri'iiinstaiiees  sliowin<i  that  other  causes  than  iiiiniiN  ei  t  ilde  paper  cuireiny  ha\e 
produced  them.  1  now  propose  to  point  out  what  are  thes.-  caiiHes.  Mr.  Spauldiii^', 
in  <tn«  of  the  (piotations  1  have  made  from  liis  ("eiitennial  address,  stat«'s  the  fa't  that, 
"In  s«!ven  years  from  .laiinary  I.  !"':'>••,  to  .laiiuary  1,  If^iT.  the  loans  [of  the.  hanksj  in- 
erejiw'd  from  ^'Jdd.tldO.OtiO  to 's:V2."..niHi.(Mi()."  When  we  eome  to  aiialy/e  the  operations 
of  a  tiank  of  diseonid,  we  naeh  a  ureat  fundament  il  triiih.  id'snpreme  importance  in 
monetJiry  «'eonomy,  namely,  that  hy  far  the  lari^er  piopiuioii  of  hank  disconi  ts  t-'^Xh 
on  >^o<k1s  in  eonr.se  of  production  and  disirihutiiui.  I  have  juit  this  importaiit  tiuth 
in  the  form  of  a  postnl;  r  •,  as  ndlows: 

'^4.  "  Coinmodities.  '.]<  onrse  of  piolintion  .■ind  tiau'-niissiiin  from  jiinduciT'  to  c.m- 
«<iiiii«>rH,  or  ultimate  j»i  ;i  aasers.  repiesented  hy  hilN  of  exthan^re.  hills  of  ladinj;, 
warehousemen's  reeei))ts,  hank  credits,  etieeks.  and  other  devices  invented  hy  tiaiik- 
vi>  ami  merchants  to  faiilitate  flu  tiatisfcrence  of  dehts  aiid  <'ri'dits.  eoustitnt4'  the 
hulk  <d' tloatinj^  eaidtal  dealt  in  in  the  loan,  iinpro}ieily  called  the  'nmney'  market."* 

"  Am  this  postulate  einhraces  a  most  important  fiindameiital  truth.  I  take  the  liherty 
of  ((uot'iig  an  extract  ftom  a  letter  I  received  in  tin-  winf.-i  id  l^7r»-'7«i  on  tin-  nuthcKl 
I  have  ad»  jd4Hl  forstatini;  in  a  concise  and  strikitinmanii'r  hadinj;  jninciplesof  nioR 
etiiry  economy,  from  the  pen  of  an  aide  writer  on  eeoinmuc  sciem  e.  Trot.  Itou  iiny 
I'rico,  of  Oxford.  'Ihe  professor  says:  "  Sti  many  thanks  for  yourleft^'r  iu  llm  Ameri- 
can. Tiinew.  It  isexceedinj^ly  ^ood.  and  I  rejoice  over  it  nnu'h.  ospefciaDy  the  powt'j]at*c 
and  princioh^H.  The '(IJTith  in  my  fortheoniin^  work)' is  capital.  I  had  t'  ooujfht, 
hut  not  deiiUitely  mid  vividly  exjireswci.  The  menniu^  jmupi?  tui  tht-  rea^m  and  inu«- 
tern  luiu.  and  it  is  most  true." 


8 


2r>.  I  will  givo  anotlu>r  postulated  truth,  which,  tr<itj»'<thfir  with  t.h«  f(»re;?oiiij;,  will 
rover  the  whoh^  husiucss  capital  dcalfc  in  \>y  a  haiikt'r,  ')«\von(J  his  own  triwiiuj^inarjiin: 
"Floating;  ('a|)ital,  or  'tratliiijj  po\v«T'  othor  than  that  siicciHtid  in  th«^  hint  poHtiilate, 
oouHistH  of  money,  the  Havinf;s  of  industry,  and  ^h(^  surplus  ineomo  of(;apital,  noi.  yot 
invested  in  nioro  permanent  tliinjis,  or  in  lands,  houses,  iaetcuMes,  steam  and  oth«r 
vessels,  or  in  tlio  shuns  of  steanisliiiis  and  railways  and  all  nninner  of  continuing 
uiMhTtakinjfs,  whieli  perpetuate  t.heumelves,  when  prudently  luainifrod,  or  in  thiugd 
not  destroyed  in  use." 

'Jd.  It  n>ust,  in  order  to  reach  a  clear  comprehension  of  tlic  p<»wer  of  hankn  for  inflat- 
ing the  imiustrial  pursuits  of  the  p4>o]ih-,  he  home  in  mi)  that  a  largo  part  of  thci 
latter  »les<Tipti<ni  of  capital  is  held  on  deposit  by  Itanker  md  is  loaned,  alon^  with 
tho  "  j»rocee(l.s"  of  hills  representinji  goods.  It  must  aluo  he  kopt  in  view  that  th« 
proceeds  of  discounted  hills  are  entered  in  hankers'  Uidgora  as  "dejiosits,"  and  aro  not 
distingnishahle  in  the  pnhlished  accounts  from  other,  or  what  are  called  "cash  depos- 
its." I  suggest  that  such  a  distiiuttion  should  he  required  by  law.  It  is  truo  an  esti- 
mate e.in  he  nuide  by  comparing  the  •'discounts"  and  "deposits,"  but  what  I  sugirest 
is,  that  the  facts  shall  he  made  ajipartMit  on  the  face  of  the  statoinonts,  h<»  that  we  can 
detect  where  and  when  business  intlation  begins,  and  how  it  lluctTuttes.  1  have  now 
demonstrated  that  intlation  is  causeil  by  excessive  issues  of  paper  money  and  exoesBivo 
discounts.     Q.  E.  D. 

27.  It  will  be  seen  how  the  magic  power  of  the  banker  turns  goods  into  "trading 
power,"  or  tloating  capital,  fn>i<i  the  numient  (he  raw  material  is  ready  for  the  market 
until  it  passes  through  the  hands  of  the  various  dealei-s  ami  manufacturers,  and  finally 
n-aches  those  of  the  numerous  distributiiig  airenrs  or  rtitail  dealers.  Each,  in  turn, 
gives  a  bill  t(»  his  predecessor  in  ownershij). in  the  chain  of  transfers;  and  each,  in 
turn,  takes  such  bill  to  his  bank,  to  be  turned  into  trading  pdwer.  to  which  category 
belojigs  money,  but  which  forTus  only  'lu  iusigniticant  three  or  four  per  cent,  of  the 
vast  i»ool  of  trading  power  or  tloating  capital.  It  therefore  iuippeiis  th.it  the  same 
bale  of  goods  is  n  presented  several  times  in  the  loan  maiket  ficlbre  ii  reaches  the 
final  dij*tribnter — tlie  retail  m(>rchant. 

*2H.  Again.it  very  c(unnHuily  happens,  when  inllatitui  has  set  in,  that  ihe  san>e  bale 
of  goo(l>.  or  cargo  passes  through  several  hands  in  a  few  days  or  weeks,  while  in 
transit  or  in  warehouse,  each  seller  realizing  a  profit  on  a  rising  market ;  and,  in  reg- 
ular and  not  purely  sjiocniative  traiisa(;tions,  each  buyer  giving  his  bill  in  payment, 
t(»  be  j»assed  thiougli  the  "discount  mill "  and  turned  into  trading  power.  Thus  the 
sum  total  of  trading  power  lu-comes  enormously  expuTided.  The  market  value  of  the 
same  products  is  reiucsi  iited  sevcial  times  in  the  loan  market,  and  as  ab(»nt  9i'>  per 
cent,  of  the  "o]icrators"  in  these  industrial  ]»ursuits  "trade"  on  n  arginsof  only  about 
10  per  cent.,  it  is  perfectly  obvious  how  a  panic.  stopi»ing  the  sale  of  goods  and  the 
"disc(uint  mills"  all  over  thecountry,  wipe  out,  as  with  a  sponge,  all  the  weaker  oper- 
ators "for  r*  rise,"  ami  nunurous  others  who  have  been  imprudent  in  the  matter  of 
giving  credit. 

This  is  .1  true  and  in  no  degre<'  exaggerated  description  of  what  happened  between 
the  years  IKIO  and  lrt;{7.  when  the  loans  of  discount  banks,  which  were  mostly  banks  of 
issue,  rose  from  $^(M»,(»(l(t,0()()  to  $;'y.',(100,()()(t5  to  say  uothing  of  the  imrease  of  paper 
money,  which  went  out  through  the  discounts.  It  is  what  happened  during  the 
seven  years  imn>edi.atcly  prcc«'ding  each  of  th(>  panics  of  Id;")?  ami  li-<T,i;  and  those 
panii's.  ami  the  succeeding  crises,  al»d  all  others  like  them,  are  ])crfectly  natural  con- 
sequences, resulting  fr«un  excessive  bank  speculation  ;  and  we  are  Just  now  commenc- 
ing another  era  of  similar  intlation,  to  be  followed,  sooner  or  later,  by  another  panic, 
and  aTiother  long  ami  agmii/.ing  ])eriod  of  stagnation.  Congress,  in  its  ignorance — I 
am  afraid  to  say  "  wisdoni,"  for  that  would  be  what  Mark  Twain  calls  "sarkawm" — 
has  passtMl  an  act  to  provide  for  the  "resumi)tion  of  specie  payments,  and  for  th« 
establishment  of  free  banking,"  the  etfcct  of  which,  if  it  renuiins  mirepeahMl,  must  be 
to  work  enormous  evils  in  our  industrial  system;  to  some  of  which  1  must  now  vlireot 
your  attention. 

;U).  This  law  authoii/es  the  use  of  the  whole  of  the  outstanding  naticmal  secnritie*', 
bearing  interest,  and  amounting  io  over  one  thousand  eight  hundred  million  <loUarp, 
as  the  basis  of  issues  ol  |)a])er  nuniey  to  banking  associations.  This  is  called  "free 
banking,"  as  if  the  issue  of  notes  formed  any  part  of  the  legitimate  business  of  bank- 
iiig — which  it  most  ctMtainly  does  not.  No  educated  cconomisi  will  <^laim  that  the 
issue  of  paper  nuuu-y  is  a  legitimate  jiart  of  a  banker's  business.  In  England  aboutHO 
per  cent,  of  all  banking.  an<l  in  France  all  but  that  conducted  by  the  Bank  of  Fraiu'.e, 
IS  comlucted  by  banks  that  issiu*  no  notes  at  ajl;  and  even  in  this  country,  according 
to  Mr.  H])aiil(liug,  the  mui-issuiug  hanks  ttutnumber  those  issuing  jtaper  money 
mori'.  than  two  to  one.  See  OeiKennial  .-iddress,  last  page.  This  so-called  "resumption 
act,"  over  which  there  is  smdi  a  fi'ss  .and  such  a  partisan  fight  Just  now,  is  simply  a 
premium  ottered  by  the  goven\ment  for  the  expansiiui  of  bank  capital,  an<l  bank- 
notes— of  vvhicdi  there  is  already  a  large  excess  beytuul  legitinuUe  business  demands. 


with 


J 


9 

fu  thirt  city  <nnl  in  oilier  Northern  .ind  Kn.sf«»rn  cilifrt  we  see  the  prieo  of  cin»iliil  niii^- 
int;  from  one  unil  a  Imlf  to  two  or  three  per  e,ent.  per  annnin,  wh'uli  is  tlie  oin>  un- 
\¥hol«v*onl(^HVl^ploMl  ot  derari^jiMl  itnln.stries,  stamlin;;  most  |>ii>niiiHHntly  f'orwiiril  in  the 
oategory.  Who  ran  doiiht  fliat  Huh  is  not  Ijir^jels  dne  to  the  excfvss  ot"  hitnkmji 
eapitaI,«hH\vn  Iromotlierindnstrieshy  iiovcnimPnthoiMisesi»iii«l  in  ''national  eMrreiiey," 
ami  to  (lisconnts  or  loans  made  on  stork-exehanf^e  se<-urities  instead  of  on  liill^  founded 
OH  ijoodsf 

;{l,  The  piiueiple  of  free  bankinjj,  like  the  principle  **(  fne  fra<les,  is  loMriijiHy  ror- 
niot ;  hut  the  prin(i)de  «)f  a  free,  and  all  hut  unlimited,  issue  of  pajier  innney  on 
Hoourities  is  fundamentally  wroiiji.  If  such  isHues  are  restrieted  to  oiui  elass,  then 
tho  (iovmiiment  violates  the  elear  intent  cf  tlie  (!on«titution.  It  is  the  most  obnox- 
ious of  all  (dass  sulwidies.  It  iH  tlie  ))aymeut  of  a  larj^e  hounty  on  hankinj;  eaj)ital, 
and,  though  a  few  hankH  have  returne«l  a  part  of  the  bounty  and  withdrawn  their 
securities,  for  vvaiifc  of  emjdoymeiit  for  their  share  of  the  "  national  eiirreney,"  it  is 
only  a  <iuestion  of  time — a  few  incmlhs,  or  a  year  or  two — when  m\v  demands  will 
again  arise,  which  will  render  si)eeie  ]>aymentN  impossible,  and  will  lead  to  a  VHKt  and 
wide-8[)n'a<l  Hi>eculation,  found«Ml  on  a  new  era  of  l>ank  inllaticui.  One  of  the  evilH, 
ami  it  is  no  mean  one,  from  wlii(di  the  country  now  sutlers  is  the  withdrawal  of 
buHinesH  tiai>ital  from  thousands  of  small  and  great  industries  and  occujiations  for  the 
estttblishmetit  of  iiaticmal  banks.  T!:^  idea  of  turning  on«  dollar  inttt  a  dollar  ninety, 
by  a  Htroke  of  the  pen,  is  very  fascinating. 

',V2,  The  very  statement  of  the  facts,  and  the  logical  conclusions  I  have  nuide  in  this 
commnnication,  slimild  sulliciently  explain  the  causes  of  the  crisis  from  which  wo  are 
juHt  emerging,  as  well  as  suggest  the  remedy  for  the  evils  that  will  Hurel-  result  from 
future  similar  crises.  1  wish.  liuw«!ver,  to  treH]»ass  still  further  on  your  time  and 
patiemse,  by  otiering  a  few  brief  general  »»bservati<ms  explanatory  of  the  ojtcrations 
of  the  natural  laws  of  industry.  The  etiect  of  the  expansion  of  bank  credits,  in  the 
manner  I  have  pointed  out,  is  tostimu?:ite  to  overfirodiKdion  of  goods,  which  jires- 
«ntly  leads  to  a  glut  in  the  markets  and  a  fall  of  i)rices.  There  then  hiiii|)ens  tlm 
reverse  of  what  took  place  when  values  and  prices  were  going  up.  Then  the  wages 
of  labor  rose,  ami  the  (Munpetilion  among  buyers  was  brisker  than  among  s(>llers,  and 
everybody  faueicd  they  were  growing  rich,  and  an  era  of  reckless  extra vagiuicc  set  in. 
Ignorant  lolly  stiutteil  forth  in  all  its  short-lived  grandeur  and  laborers  snuandered 
their  abundant  earnings.  Now,  liowev<'r,  after  the  ^i.uiic  has  come,  and  the  sourc'es 
of  (iapital,  largely  tic.titious,  drawn  from  bills  discounted,  are  dried  up,  there  are  more 
stdlers  tha,ii  buyers  of  goods  and  houses,  and  the  paiiil'nl  jiroccss  of  a  n-duction  of  the 
luxury  of  living  and  in  the  wagi's  of  laboi'  simultaneously  begins.  (Micap  goods  noees- 
sitate  cheaji  labor,  and  thousjiiuls  of  laborers  are  turned  adrift,  and  an  army  of 
Ho-oalled  "  tramps"  is  the  result.  Men.  as  a  ruh\  prefer  woik  to  begging,  or  ste.iling, 
or,  as  it  is  now  called,  ''tramping."  Hut  there  are  certain  skilled  workmen  who  can 
only  be  retained  by  the  employers  of  labor  on  reduced  wages,  and  who  cointi  before 
yonr  committee  to  tell  their  wrongs.  Tlu'y  demaml  that(.!oiigress  shall  do  something — 
they  don't  very  clearly  know  what — to  relieve  them  of  the  evils  they  (complain  of. 
Hut  I  need  not  comment  on  their  theories.  As  a  rule,  they  are  not  [)hiloso|dier8 
or  I'conomists.  What  they  fail  to  see  is  that,  when  the  products  of  labor  become 
cheaii.  their  reduced  jtrice  enables  the  laborer  to  sell  his  labor  cheaper,  because  he  is 
a  consumer  as  well  .as  a  pniduc.er.  in  a  word,  cheap  goods  make  cheap  labor,  and 
ehi^a])  lal»or  reacts  on  the  luiirkef  value  of  goo  Is  uiilil  Itottom  is  touched,  until  equi- 
librium is  estaldished  by  supply  and  <ieiiiand.  'I'hese  ai<<  ii.ituial  compensalious 
which  the  legislature  cannot  elle(!t. 

U,$.  Now,  what  ('ongress  ran  d<»  is  to  s«'t  to  work,  faithfully,  earnestly,  patiiMitly,  and 
hi)iu'.stl,v,  to  undo  all  legislation,  repeal  all  stiitutes  it  has  ]tassed  from  the  beginning, 
whicdi  assiinw  to  control  in-  which  iiitiinge  the  natiir.i!  laws,  which  are  as  <'ertainly  the 
laws  of  (Jod  as  any  w(»  know  ol'.  This  work  must,  of  course,  be  slow.  (Joiigress,  act- 
ing on  tluM-rroneous  theory  that  it  can  make  better  laws  than  the  great  natural  Law- 
giv«'r,  has  jdled  uji  a.  vast  masw  of  statutory  laws,  specially  intended  to  change  the 
natural  order  of  things  in  the  industrial  world.  If  iliereever  existed  a  time  when  ''all 
men  were  born  fn-e  and  eiiual,"'  it  imi.Ht  have  antt-dated  the  existence  of  Collg^^ss,  tor 
nearly  all  its  efforts  seem  to  ha\f  been  directed  to  have  men  born  uiie<iual.  I'he  evils 
of  class  legisl.'ilion  are  very  old,  and  cimiot  be  eradicated  by  the  stroke  (da  pen  with- 
out causing  great  sutiei'ing.  'I'hey  cling  to  society  like  barnacles  to  the  ship's  bot- 
tom, but  canmit,  like  barnacles,  be  sudilenly  removed  without  injury  »o  the  social  ship. 
Tile  country  has  i>rosperc<l  in  spite  of  bad,  and  not  becanse  of  good,  industrial  legJHla- 
tion. 

34,  The  theory  that  the  legi.>  ure  should  frame  and  <'na(t  laws  to  direct  all  indus- 
trial |mr-.uils  in  particular  channels  is  iiol  only  IniidaMUMilaily  wmiig,  but  has  been  the 
greatest  hinderance  to  the  di'velopmeiit  of  national  wealth.  The  true  theory  of  iill  iu- 
(liislri<'s  is  till'  in  'iiost  freeilom  of  individual  action  to  act  ami  to  do,  to  buy  and  sill,  t<> 
Behcet  .ami  lollow.ou  the  part  of  every  citi/,en,as  to  him  or  her  seemeth  best,ati,v  jtur-- 


An, 


10 


8  lifc.jiiHt  .'»8  each  undjtUniB.v  b»'  inclined,  without  m rriiij:iii^<uu;h  other's  ri^ht«.  Tt,w«" 
liropoHitioiiH  may  hv  \H>t*iulaWd  uh  follown:  "All  (ihHfruclioiiH  piaocd  on  individual 
riuhtH,  in  nHjx'ct  to  what  in-opN' hIujII  do  <»r  piitdurn  with  thoir  <apit;il  and  labor,  or 
whon^  tht\v  Hhall  l)ny  or  h«-1I,  ar«',  dir«'(rt  iiitriiiy<iiitMi(K  of  tlio  natiirfkl  riulitM  <il  niutiiiud 
tin;  IftWH  of  naturf, ;  and  arc  iiijiirioiiH  to  nocicty  just  U>  the  rxt^^nl  to  which Miioh  iutoT- 
lV;n",nc«'H  can  Iki  made  i-flVctual." 

li").  Th«'  lawt  iirviit  orror  coniinittfd  hy  ('(ni'^if'sf*,  inHpin-d  l»y  a  widr.-uproad  p«)pnlft.r 
dfltmion,  and  (iilculatcd  to  injuro  induHtrial  piirMiits,  was  fho  piiHHu;f<>  of  thr  ho  «'.an«'«l 
law  for  tho  "  rniri(»in'tizaf  ion  of  Hilvcr/'Tliis  law  isa  paljtahle  infriim<Mnt>nt  of  Mio  law> 
<»f  ti.id«v  It  in  an  attempt  to  rcfiiiliitc  tin-  inarkot  xainc  l»»'tAvr.»'u  jfold  and  nilvor — tw.i 
<'.on»nioditi(v4 — on»- of  which  is  known  to  he  very  iiiiich  toorci  wtaldc  in  itH  market  value 
than  the  other.  ItH  etfect,  if  it  rertiaitis  inirepe;iled.  will  he.  perfectly  ohvions.  Th»' 
silver  didlar,  which  has  lieen  ovcrvalned.  and  made  lej:al  tender  when  a  cortaiv> 
amoiini  shall  he  coined  and  ciKiilated,  will  certainly  drive  the  iridd  coin  pnrrhaw*! 
for  two  hnndred  millions  of  iiiterest-heariiiii  honds  out  of  «irctilalion,  if  the  jieople 
will  consent  to  accept,  Hindi  an  iiiroiivenieiit  and  (liiiliijirin<i  istandard  <d' valne.  Thoie 
wan  no  exciiHc  for  paHHinjj  this  law.  tor  ever\  liody  noIoI•i(lll^ly  p^4^fers.  for  convcniiaiee,, 
the.  "f^reenhack"  didlar,  and  t  he ca pi tal  invent imI  in  such  'M'lipt  coins"  tmint  shrink  to  tlie 
market  valne  of  Milver  hiillion,  and  chictly  will  the  loss  fall  on  the  workinjj;  c1a^>^. 
who  alwavH  .sutler  most  hy  a  lliicliiaf inu;  cnireiicy,  aii<l  who  ate  expected  to  liiiy  th«i^<.- 
dollars  in  exchange  for  llnii'  lahoi  at  the  tiold  pi  ice.  Ir  in,  iheretoie,  to  he  hoped  that 
your  coiiiniittee  will  rccoinniend  the  imiiicdiii.te  rcpe;il  of  the  silver  act. 

;W).  There  is  a  nionstroiis  delusion  )(rcvailinfi  throiitihoiit  the  lomitry  at  the  pn'seiil 
time,  and  ont«M'oppin^  Htronjriy  in  Connrc.ss,  on  tli»'  suhjeci  at'  paper  money,  to  'whi<'ii, 
I  preHiinie,  your  coiiiiMitiee  will  <liicct  its  attention.  It  is  <lo<imatically  asserted  that 
"thcro  iH  not  enou<ih  pajier  money  to  do  the  husini'ss  ot  the  country;'"  and  many  uieii 
of  ilillin'in;e  ^o  so  far  as  to  propose  to  piiy  otV  the  whole  intcrcst-heariiii^  debt  Ity  tli<- 
iwHUC  of  paper  money  hy  the  fxoverniociit.  This  iiha,  nodoiilil,  (ui^inated  out  of  tin- 
opposite,  ei|ually  eri-oneous,  theory — now  the  law  of  the  land — which  proposes  to  ui-^' 
the  whole  naruuuil  debt  as  a  hasis  lor  i.ssiiin^j  national  curiiiuy  to  national  haiikM.  H 
thoHc  who  ciint;  to  these  delnsiiuis  will  exercis»'  only  a  nnideiale  amount  ot'  rciusoniiifi' 
]>ower,  they  cannot  tail  to  see  the  serious  crrius  tlie\  are  tea<  hinu  the  people,  who 
cannot,  as  a  rule,  acipiire  a  ciu'recl  scienliiic  knouhdi;e  <if  inoiictai\>  economy.  I  have 
Hhown  that  the  tracliiij;  <'apiial  used  in  uiii-  industries  consists  ot' about  tour  or  tive  ji.*r 
ct'tit.  only  of  money,  ITi  percent.  (dCapitaJ  sa\fd  from  the  piutits  of  labor  and  exc«'*8  of 
iucomt;  over  out  <io  exisfiu;;  in  the  I'orm  <d'  bankers"  depusiis,  and  some  hO  percent,  of 
trading  pow«T  advanced  by  b.mkers  <ui  securil  ics  jiiveu  for  ^nods  in  <-ourse  «if  iiroductioti 
auddiHtributitM!  to  consumers,  allot  whichdcsciijitioiisof  trad  inj;<a  pit  al  are  made  avail- 
abl«^  by  the,  onndpotenl  power  of  the  clntck.  Money  beiu^i  a  wludly  uuprodiictiv«'  fono 
of  inve*itmeut,  while  other  descri)itioiis  as  a  rule,  yield  a  ju'otit,  no  ^oiid  bnsines^  niai. 
will  ki^ep  his  capital  invest^-d  in  it  an  hour  bcynudtlie  time  when  he  lan  lind  what  hf 
thinks  will  yield  a  return.  It  thus  happens  that  no  miu'c-  nu>ne\  I'aii  be  kept  in  circ.ulatiori 
than  what  is  needed  t'or  <laily  uses.  Miuiey,  ir.  tact,  is  h.auliy  used  at  all  in  the  iarj^«- 
imlustrics  of  the  country.  Its  uses  are,  nevertheless,  numerous,  and  it  is  iudisjteiisab^ 
within  the  limits  of  those  uses.  One  of  these  is  the  service  it  peifoiius  as  a  uieasuiv- 
of  th«^  market  valiu'  of  all  thinj^s  having  market  value. 

;f7.  It  w  ill  have  been  sikii  froui  what  I  have  stated  that  'MUT  a  period  of  intlation. 
resultiu^^  from  cx<'e«,sive  hank  credit^s  (disc<uints).  aceiunpauied  by  a  rise  in  the  pricejt 
of  lahoi  and  it^s  puKluctions,  there  romen  a  jieriod  ot'  ciuitractitui,  r»sultiu^  from  the 
annihilation  of  uumerons  trading  inar<;ins  ut'  capital  and  a  laige  diminution  in  th< 
niimlHr  and  am<uint  <d  hills,  al tended  by  luw  juices  and  a  si'anity  of  tradiufj;  capi- 
tal. It,  thiirefore,  lo};iially  follows  that  ii  is  not  more  money,  but  more  cre<lit  capi- 
tal, or  billc,  that  is  needed.  It  is  also  clear  that  in  timej>  of  crises  less,  and  not  moi-«i, 
»non«\v  is  demaiiderl,  or  can  be  held  in  active  circulation,  than  in  times  of  expaii»>ior. 
If  there  is  freti  coina|i:e  of  all  metal  oti'ered  to  the  i;overnmeuf.  and  the  jr<(ve)i  ment 
has  a  uionofKdy  of  the  paper  issue  as  it  has  of  thecuiu  issue  and  as  the  hank  id' Kranv^<- 
has,  thoH«'  who  have  bullion  for  sale,  ,is  a  riih  .  w  ill  pii'ler  to  accept  jiaper  in  pasmeut. 
.'IS  they  do  in  France  and  Knj;lan<l.  Ilencf.  under  sm  h  a  system,  there  will  always  be 
exactly  at*  intudi  money,  paper  and  metallic,  in  circnial  ion  n.i  tlw  /««/)/(.  uhn  ahcatif<  jhti^ 
lull  yrrict  J'vr  it,  Urmntnl.  Here  we  have  a  self-actinii  pror»sH.  or  a  juocess  k«pt  iri 
motion  by  thej;reat  natural  law  of  sup|dy  ami  demand.  If  there  is  to*>  little  money 
at  any  time,  its  market  value  will  rise  :ib(Ue  the  market  value  of  bullifui  .and  the  lull- 
lion  wil!  come  to  the  mint:  if  too  much,  coinajie  will  st<>p.  riiis  reasiuiiiifi,  whith 
s«M'niH  t<iire  iM  denuinstrable  as^eouiei  ry.  \sili  siniw  how  very  uns;it"e  it  is  to  di'leii'at*  ^ 
an  iutitiity  of  banking  assoi'iations  the  preroyaiive  of  the  si.iie  to  issue  paper  nuuiey, 
I'^inveitihle  or  iiieonvertible. 

;{f  Much  ('f  the  dolueion  prevailinj^  amou;j  the  pertpli  no  dtuiht  arises  from  the 
not  <liwtiir\mttt]Ujj  hetwo«Mi  money  as  money  and  othei  kinds  o(  capital.  Writ^ers  <*o 
ecoimu'i*  Hieu<-e.  t»ueh  as  the  lat^'  Mr.  Uaj»ehot,  author  of  "  Liiuibard  Str»'et.  "  polityci*) 


11 


tl.e 


Hp«}ik<rR,  ftinl  nwri  h.inf+.  htkI  banktTH.  oontirHiall\  f ''tiifotitMl  tlif  twf»  ft  rms.  Tlioy 
Hooak  of  tlio  "  nKincy  ir.arkof "  wh-'n  Uioy  incrvn  thn"I(»;ni  nuukct."'  'I  hny  talk  of 
'Vhoap"  aiul  "ilcjir  morn-.y  "  ins(«'H(l  of  iln-ap  ami  dt-Hrfapilul.  and  so  th*-!  <iii<Mlu<'at4Ml 
]uiblic  conic  to  (liinand  "  more  Tiumcy,"  wlmn  Dwrv  is  alr»Miiy  an  u\ccs^  luckod  up  in 
thn  vuultfi  of  the  hanks,  which  Ihc  ]ico)»lc  rcfiiHfi  to  Imy. 

'MK  Ah  tlic  llrKihh  inonctary  HyHtcm  hiiM  iiwiiiy  inlminTH.  I  wisli  to  ](oint,  ont  Hom<» 
very  wrioMH  »lt  fccfn  in  itM  workinj^s,  to  whi<h  an-  dim  the  extreme  Mciisitivmcwi  of 
MritiHli  fiiianciai  hiisiiieHH.  ThiH  seiisitiveiicKS  iiiiscH  from  tlie  jioli(;y  of  tlin  Hank  of 
Kn/rland,  in  usiii;;  its  lar;,'p  ( apilal  and  inlhien<  c  to  eontrol  the  traiie  in  Inillion  and 
rnle  tlic  rate  ofdimonnt.  Instead  of  f|iiieliy/(»//</iri«7  or  kecpinf^  in  the  market,  it 
directs  it>«  efforlH  to  operate  afiainst  the  natural  law  of  snj>ply  and  (Itinand.  It  will 
it^adily  he,  Heen  that,  if  its  fradinj^  reserve  consiste.l  of  »-oin  or  leff;il-tender  iioteH 
iHMiied  hy  the  state,  couvertihle  into  f^old  on  demand,  and  the  hank  tieased  to  he  a 
dealer  in  hnllion,  except  to  mark«<  loans  on  it.  as  on  other  commodities,  this  sensiti ve- 
neris which  it  imparts  t<i  all  industries  would  cease,  because  the  nuimi^ers  wtmhl  no 
lonj;«^r  have  a  ni«iti\e  to  iict  on  the  price  of  capital.  They  would  have  no  mor« 
int^'pest  in  the  IliKluitions  of  the  hullion  market  than  in  those  of  the  corn,  cotton,  or 
<'.heese  markets,  iirother  com  modi  tics  on  which  they  make  jidvanccH.  It  is  no  un(;omnion 
ihing  it)  SCI'  the  Hank  \>\'  l")ii;;'.an<l  rate  from  a  li.alf  to  two  )>er  cent,  ahove  the  market 
rate.  'I'hc  I  fleet  on  the  j;enrral  industries  is  very  injurituis.  So  far  as  the  hj.nk  can 
alFcK't  or  counteiuct  the  law  of  supply  nwA  denuind  hy  its  nu-re  tiaf,  it  is  the  sanie  as  a 
tJix  set  on  labor  ami  its  pmduits.  which  tax  is  raised  or  lowered  by  the  arbitrary  will 
of  a  despcit,  a)ul  it  is  claimed  by  hiyh  authorities  thai  the  liank  exercises  this  power 
in  order  to  pridit  by  its  ctlccts.  Whenever  there  is  a  considerable,  rise  in  the  bank 
rate,  securities  in  which  the  bank  is  a  larjre  d<»aler  fall,  ami  the  manaj^irs  become 
heavy  purchasers.  The  raf^-  is  then  run  down  t^xtreniely  low  ami  n|>  go  pric,e+i,  and 
t,he  bank  '•unloadH."  |  hope  your  lommittee  w  ill  not  think  I  am  coiitoundin>;  the 
pra<"ticeH  of  Wall  iind  I'road  Streets  of  a  few  years  airowilh  those  of  Threatiuecdle 
."Street  of  tod.iy,  wlnii  I  am  mily  relalin.n  what  Oxford  ccouomisis  and  others  of 
hi<»h  rejuitc  in  linaneial  and  econ»»mic  circles  have  publiidy  stated. 

•id.  My  communication  has  urown  so  loni^  that  J  fear  I  am  ovennnniny  the  space 
yonr  <'<uriniittee  will  have  to  '^\\v  to  such  p.-tjiei-s.  I  uuibt,  however,  diie<-,t  ycusr  att<  ii- 
tion  to  the  seiious  evils  arisinj^j  from  "protcctint;"  so)rn<  biamhcs  of  industry  at  the 
expense  of  otheis,  a^ifle  frcun  the  bonus  offered  for  attra<tin;i  an  undue  amount  of 
capital  U)  the  business  of  haidiiuf;,  where  tin'  practice  is  most  sensibly  and  injuriously 
felt.  If  jirotecfion  has  any  effect  at  ivll,  it  must  be  to  attract  capital  and  lalmi  away 
i'rom  vtiprotettvd  to  ]»i}tt<tid  iudustri(^s.  So  far,  then,  as  this  result  is  accomplished, 
the  nn)>rotect«'il  imiustries  are  depleted  of  their  main  elements  of  siu'cess  and  ar« 
allowed  to  lan^^nish.  When  the  inevitable  day  of  ov  er-production  arrivc+t  in  the«« 
proUM'K'd  branches,  there  is  a  de;siruction  of  the  capital  which  protection  has  drawn 
from  it*i  natural  channels,  and  the  laborer  is  sent  abroad  as  "a  tramp,"  or  to  seek 
other  kinds  of  occupation.  Thus  the  et>'orts  of  Congress  tu  override  the  natural  lawf* 
of  industry  lead  directly  to  crises  and  toe  fienenil  derangement  of  the  social  and  induf- 
trial  systems.  To  be  consistejit,  {'ongrcHs  should  either  protect  »very  inihistry  iM^nally 
or  leave  them  all  alike  free,  to  be  regulated  by  the  natural  laws. 

41.  But  it  nniy  be  argued  that  "  frce-traile  "  Kngland  has  it+i  jianics  and  it,s  rri'^i,  a* 
well  as  "protecte<i"'  America.  Quite  true  she  has,  and  for  the  same  icasons.  America. 
her  natural  customer,  whose  breadstntfs  and  cotton  she  requires,  refuses  to  exchuiigv* 
with  '"er  a  large  ])art  of  the  juodticts  of  her  labor  and  cajtital.  Kngland  huH  also,  a* 
I  hav  nhown,  an  artitieiallv  and  badly  regulat^rd  numetary  and  finantMal  svstem,  of 
which  the  Hank  <»f  Kngland  is  the  center  or  focus,  a  bank  thi.t  persists  in  treating  its 
own  share  of  tlic  note  issue,  founded  on  securities  instead  of  cash,  as  good  cash  re- 
serve, and  has  a  traditional  board  of  managers,  wh<»,  because  they  can  take  these  notes 
lo  the  issue  depiirtuient  and  Imy  gold  with  them,  fail  to  perceive  the  ditl'crcnoe  Ite- 
tween  cash  and  crctlit.  This  is  the  luitural  consequence  of  banks  investing  all  their 
paid-up  capital  in  national  securiti«'w,  and  relying  on  bonowed  caj)ifal  for  a  trading 
margin.  I  wisli  your  coiufniltic  to  nuike  a  note  of  this  impoTtant  fact,  for  it  cuts  the 
ground  fi-om  umler  two  ihousand  luitional  banks,  as  well  .'W»  of  the  Uank  of  Kngland. 
If  the  plan  is  good  in  banking,  why  not  extend  it  to  all  industries — the  manufactur- 
ers of  engine**,  cars,  and  rails,  (or  iuHtancef 

i2.  1  have  omitted  to  meet  a  plausible.  I»ut  most  unfiumded  pret,«>xt,  set  np  by  worrvj 
Imnk  doctriiiains,  in  favor  of  banks  of  is.><ne,  until  now.  IL  is  that  a  itivjier  curiency, 
issued  by  the  state.  "  is  not  a  juoper  commercial  currency,''  because,  forsooth,  "it  docH 
not  grow  out  oi"  industry  and  production."  See  Mr.  Sjaiil  ling's  ('ent^'imial  A('dre>-s. 
page  57.  Th"  Times,  of  this  city,  lately  assert«'d,  that,  as  paper  money  naturally 
grows  oat  of  commercial  transacticuis,  «mly  banks  i  a'l  keep  the  supply  exactly  equal 
to  the  demand.  The  utter  absurdity  of  such  assertioa — reasouing  it  eanni  t  b  i  called  — 
appears  from  the  self-evident  proposition  that  patM"  money,  convertible  into  mefa). 
whicb  is  the  only  sound  pa^nr  curiency,  rt-st*  on  the  ia« IaI,  auJ,  ao  tbos*  wbo  u«e  it 


12 


ill  eoinnuirt-ial  or  ntli«M'  l>ii.iiiu>HH,  |iav  the  Name  pricn  for  it  ah  tli<\v  pay  for  intitalHv 
ir/ioiifi.v,  it  followH  iiH  a  logical  dtinoiis' ration  Mint  a  Ktato  imhiu)  xh  jiiat.  !!h  much  a  com- 
inen'ial  curnMicy  hh  metal  itMnlf.  U.-inkMaro  not  tlHMlrimlieH,  by  divinorij^ht.,  tornfjulato 
fn  ;>plv  and  (i<-iiian(l.  't'lio  wan  m  of  liitt  |i«'o|ilt>,  who  prt^ft4r  ^(hmI  papt-r  nioiitiy  to  coin, 
untl  especially  to  tli»<  siiort-weinlited  nilvfi  dollar,  (lulermiiie  the  Hiipply  of  the  more 
eoiiveiiieiit  tool,  and  not  baukt*  at  all.  Tliu  (|nantity  and  amount  of  trailing  power, 
roHUikMiK  from  bills,  are  more  within  t)ie  <-oiitri.:  of  bankH  than  iiion«'y  which  the}  le- 
:jeive  o*i  «I /posit  and  keejt  on  IdmkI  to  aec omniodate  cuHtonierH.  iiilH*  of  exchange  cer- 
tainly do  "grow  out  of  iiuliiHtry  and  production,"  but  money,  metallieor  paper,  never. 
4U.  I  earmwtly  hope  your  e«)inmitt«/e  will  H(!e  Mie  in-uropriefy  of  Congren«i  att«4m))t- 
ing  to  regulate  the  hours  or  the  wages  or  jiric*,  «)f  the  products  of  labor,  all  of  which 
belong  to  the  name  category.  Finally,  as  far  as  the  prest  nt  de[»res8ion  in  business  is 
concerned,  Ooiigress  should  not,  in  my  judgnient,  attempt  to  interfere  with  tlie  action 
of  the  natural  fiiWH,  which  are  rapidly  .netting  the  iiuinstrial  nia<'hinery  in  motion 
agaiii.  What  C«mgre8h  can  properly  and  iisefnlly  do  is  to  wit  to  work,  a«  I  have  be- 
fore suggested,  and  fr«'«  all  industries  lis  fust  as  a  <lue  regard  for  vested  legal  abimes  will 
permit,  without  a  too  violent  shock  to  society;  and  lirst,  and  most  important  of  all, 
abolish  all  banks  of  issue.  A  long  and  careful  analysis  of  the  operations  of  such 
banks,  commencing  with  the  establishment  of  the  Hank  ot  Kngland  in  16D4,  has  led 
ino  U)  the  irresistible  c(mclusion  that  nearly  all  the  evils  arising  from  banks  in  modern 
times,  and  they  have  been  enormous,  have  resulted  from  banks  of  issue ;  and  that 
nearly  all  the  advantag<>H,  and  they  have  been  imiuenwi,  have  been  due  to  banks  of 
deposit  and  discount.  I  therefi>re  say  abolish  banks  of  issue,  as  such,  in  toto,  and 
amend  the  national  banking  laws  so  as  to  comjiel  all  joint-stock  banks  to  organize 
under  them  and  report  to  a  department  the  ccmdit ion  of  their  ali'airs.  Wlien  some- 
thing of  this  kind  is  done,  and  the  National  (Government  ceiwes  to  ovenide  the  natural 
laws  of  Ho«'iety,  one  great  step  will  have  been  taken  towards  averting  those  destruc- 
tive industrial  cyclones,  whicli  are  tin-  etforis  of  natural  causes  to  cure  artiticially- 
prodncied  evils. 

44.  I  had  intended  to  have  closed  with  the  hist  [laragraph,  but,  since  it  was  written, 
I  notice  great  stn'ss  is  laid  by  ma:i\  "stump"  oratois  and  sonu*  more  tlumghtfnl 
rejisoners  Oil  the  ctfect  of  the  "destruction  of  property  jintduced  by  a  million  of  men 
during  the  four  years  of  the  civil  war."  It  is  strenuously  argued  by  many  that  the 
panic  of  September,  \HTA,  eight  years  and  a  half  after  the.  war,  and  f«>llowing  seven 
or  eight  years  of  great  prosperity,  \mis  largely  due  to  k  .<;h  destriu^tion  ol  property. 
The  same  class  also  lay  great,  if  not  e(|iial  stress  on  the  inllation  of  the  ]iaper  cur- 
rency. Now,  a  nioinent's  relh^ctioii  will  Klii>w  the  absurdity  of  the  position  taken  by 
such  reasoners.  They  argue,  jpiitt!  correctly,  that  bunk  and  currency  inflation  led  to 
over-prodiH'tion  iin<l  a  general  tall  in  the  ]»ric(^sof  labor  and  goorts.  These  gentlemen 
are  called  on  t(»  exjdain  how  the  xcnrvihi  of  labor  and  goods  during  the  war,  caused  by 
the  destructive  occupations  of  a  million  of  men,  could  liavt^  i:iiluence  in  bringing 
about  a  crisis  at  a  time  when  the  nlark(^t8  were  glutted  with  laltor  and  production, 
Btimulute<l  by  intlation.  The  twi»  propositions  seem  to  me  to  be  wholly  irreconcilable, 
even  on  the  theoiy  of  the  Satyr,  who  blew  hot  and  cold  at  the  same  time. 

45.  I  will  explain  it  for  them.  The  ileatrueti<m  of  goods  ami  waste  of  labor  are 
represented  by  the  national  debt,  and,  to  a  large  extent,  have  yet  to  \w.  ]iaid  for  or 
made  good  to  society.  We  simply  borix>wed  \\w  capital  w  hich  has  enabled  us  to  bridge 
over  tlie  chasm  of  wasted  labor  and  destruction  of  goiwls  and  other  prt)perty,  and  the 
interest  falls  lightly  on  the  national  industries.  As  a  nuitter  of  fact,  proved  by  the 
census  of  1870,  the  withdrawal  of  a  million  of  men  for  tour  years  from  productive  in- 
dustry and  their  employment  in  dt-struction  ')f  proi)erty  w.'w  set  ott'  by  the  stininluB  of 
high  ^trices  (caused  by  the  intlation  of  capital  and  valutas)  on  the  productive  onergieJ* 
of  those  who  remained.  Abcuit  9.")  ]>er  cent,  of  all  tlu'.  products  of  labor  are  <lestined 
to  destruction  by  consumption  within  the  year  in  wlii(di  they  are  j)roduced  and  taken 
to  market.  Hesides.  tlios*)  who  lay  so  much  strt^ss  on  the  <lestruci ion  of  the  war  are 
called  on  to  prove  that  the  siiridiis  profit  of  labor  and  capital  was  lesi.  during  than 
prior  to  and  since  t\w  war.     This  will  be  a  hard  thing  for  any  .statist    ian  to  «lo. 

NovKMin-.u  If),  187H. 

Since  the  foregoing  com luunicat ion  was  wiittt'ii  the  resMJtsof  the  elec'tions  in  twenty- 
nine  States  e,nable  us  to  perceive  m  tst  eh  arly  that  the  country  will  not  tolerate  an 
inconvertible,  inllated,  and  tliu  tuating  legal-tender  paper  currency.  No  leading  man 
possessed  of  conuiion. sense,  will  any  longer  follow  the  if/viit  /a  tuux  of  ''  fiat  money."  That 
question  may  be  taken  as  settled,  and  as  biding  no  long'  r  a  disturbing  element  in  na- 
tiiuial  politics.  The  mily  one  in  respect  t«>  currency,  is  the  substitution  of  national 
for  bank  notes  and  the  constitution  of  a  "  Money  I)e[  jirttnent  of  State,"  wholly  inde- 
pendent of  the  Treasury  and  unconnected  with  banks.  Until  this  is  done  the  currency 
question  will  continue  to  boa  leading  subject  of  agitation  and  contention.  If  it  should 
die  out  for  a  time,  the  next  crisis — which  is  as  certain  to  come  in  a  few  years  as  the 
rising  and  setting  of  the  sun,  a'ul  which  will  be  produced,  like  »11  past  crises,  by  hank 


13 

JMnfis  of  paper  Hiid  inflation  in  bank  .•anifal  aiul  .li8connl*-vvill  ,aMw>  a  ronr^wRl  nf 
^^M^ftlfJ'':'"  *'".«'"'."'«'•  »«>»«  IHMi.Ml  of  iinancial  enHmrraasinont,  Zw  i«Tho  U„?e 
to  cut  the  coimoction  lj«twe«n  tl:«  uaf   n  and  the  banks  and  to  estab  i^h  L  ili«  of 

'oto™     *''*'"     "^*''''  payment  but  th«y  cannot  command  ''a  coriuJal-rg^ii"  of 
I  have  the  honor  to  be  Kcntlomon,  yonr  very  obedient  servant 

'I-h.  CON«U«S8,ON*.  T.ABOR  COMMm'KK.  "'    "''''''^'^''    '"^ '' '' ^^''^ ' 


A 


